Setting Up a UK Company
How to incorporate a limited company in England & Wales, including registration, directors' duties, and ongoing obligations.
Overview
Incorporating a company creates a separate legal entity with its own rights and liabilities, distinct from its shareholders and directors (Salomon v A Salomon & Co Ltd [1897]). Most UK businesses incorporate as private companies limited by shares (Ltd). The Companies Act 2006 is the principal legislation. Incorporation is done through Companies House, either online (same-day incorporation) or by post. Once incorporated, the company must comply with ongoing filing and reporting obligations.
Step-by-Step Process
Choose Company Name and Type
Select a unique company name that complies with naming rules. Check availability on the Companies House name availability checker. Choose company type: most businesses choose 'private company limited by shares'.
- Names must end with 'Limited' or 'Ltd' (or Welsh equivalent)
- Cannot use names that are offensive, suggest government connection, or are too similar to existing companies
- Consider trademark searching your company name
Prepare Formation Documents
Prepare: Memorandum of Association (statement that subscribers wish to form a company), Articles of Association (company constitution — most companies adopt the Model Articles), details of directors and secretary (if any), registered office address, and statement of capital/initial shareholdings.
- Model Articles are suitable for most small companies
- You need at least one director (who must be a natural person)
- A company secretary is optional for private companies
Register with Companies House
Submit formation documents online at Companies House or by post. Online incorporation costs £12 and is usually completed within 24 hours. Paper applications cost £40 and take 8–10 days.
- Online is faster and cheaper
- You receive a Certificate of Incorporation with your company number
- The company legally exists from the date on the certificate
Set Up Business Operations
After incorporation: register for Corporation Tax with HMRC (within 3 months), open a business bank account, register for VAT if turnover exceeds £90,000, set up PAYE if employing staff, and arrange business insurance.
- Register for Corporation Tax online through the Gov.uk portal
- You must file a Confirmation Statement (annual return) every year
- First accounts must be filed within 21 months of incorporation
Costs
Important Warnings
Directors owe legal duties to the company under the Companies Act 2006 (ss.171–177), including duties to promote the success of the company, avoid conflicts of interest, and exercise reasonable care.
Failure to file accounts and confirmation statements on time results in automatic penalties and can lead to the company being struck off.
Directors can be personally liable for company debts in cases of wrongful trading (Insolvency Act 1986, s.214) or fraudulent trading (s.213).